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South Korea faces risk of long-term economic slump: president

South Korea's economy was still in crisis despite some signs of improvement and it faces the risk of falling into a long-term slump, President Park Geun-hye said on Wednesday.

PHOTO: BLOOMBERG

[SEOUL] South Korea's economy was still in crisis despite some signs of improvement and it faces the risk of falling into a long-term slump, President Park Geun-hye said on Wednesday.

In a televised parliamentary speech on next year's budget bill, Mr Park cited low economic growth, low inflation and the weak yen as three main risks facing Asia's fourth-largest economy and its corporations. "We are at the crossroads between achieving another leap forward and falling into a stagnation, and this is the golden time to rebuild the economy," Mr Park said, while also saying an ageing population was a risk to the trade-reliant economy.

South Korea's economic growth is set to pick up to the mid-3 per cent level this year from 3 per cent recorded last year and the employment rate to 65 per cent from 64 per cent, Park said.

She reiterated her commitment to transforming the economy, currently dominated by big manufacturers such as Samsung Electronics and Hyundai Motor, into a more balanced one between manufacturing and service sectors. "We must pursue more balanced growth between domestic and exports, companies and households, and manufacturing and service industries for sustained growth of the economy," she said.